And interest has to be higher than the actual inflation rate, not the phony one the government publishes.vincecate wrote: Thu Jul 28, 2022 8:34 pm The negative real rates have given us an all time low in the Financial Stress Index:
https://fred.stlouisfed.org/graph/?graph_id=1004739
I really don't think they are effectively fighting inflation yet. They rush to drop rates and are so slow to increase them. Inflation is going up faster than rates are. The CPI at 9.1% and they just moved rates from 1.75% to 2.5%. In the past to fix inflation interest rates had to get higher than the inflation rate. At the pace they are going they will never get there.
Phong, bear markets that are accompanied by a recession tend to be long drawn out affairs, quite different to non-recessionary bear market corrections.Phong Tran wrote: Thu Jul 28, 2022 9:48 pm
.... even with the after market action, if they can get above it and hold then we might be in for another month or two of corrective action. If they can't, well, guess we'll see what the next two trading days bring.
Vince, I am trying to figure out why the Financial Stress Index is important and why it should be low because of negative real interest rates. The average person must feel under attack first with high inflation and now rising interest rates on debt that is much too high because of the previously ridiciously low interest rates.vincecate wrote: Thu Jul 28, 2022 8:34 pm The negative real rates have given us an all time low in the Financial Stress Index:
https://fred.stlouisfed.org/graph/?graph_id=1004739
I really don't think they are effectively fighting inflation yet. They rush to drop rates and are so slow to increase them. Inflation is going up faster than rates are. The CPI at 9.1% and they just moved rates from 1.75% to 2.5%. In the past to fix inflation interest rates had to get higher than the inflation rate. At the pace they are going they will never get there.
Higgie, I have also now gone short, and will add to the shorts as appropriate. As you say the market may rally up a bit, and for a couple of weeks, but the probability is down quite a long way. At some point boomers, who own a lot of the market will get concerned about their retirement and then panic and that will seal the down trend.Higgenbotham wrote: Thu Jul 28, 2022 8:23 pmI started to go short today near 4100 before and after the cash close (the market exploded higher after the cash close). That may be the final burst higher but I kind of doubt it. I will add some if the market gets near 4200 and 4300.Higgenbotham wrote: Tue Jun 14, 2022 4:21 pm This is the 11th trading day since the May 27 close and there were recently 3 gap down days. The bears will press their luck but I am not short. That's not to say the market won't fall further. I have no idea. But the easy part of the down move by my reckoning is over.
Based on my previous projections, January 2023 would have been my first approximation of an interim market bottom as well. A good 40% off from top to bottom. My initial line of thinking for an August downturn was that the democrats would want a rising market into the mid term elections, so downturn in Aug-Sep and then another bear market rally into Sep-Oct. Can't see them trying to win an election when a market crash is fresh in the minds of everyone, and also don't see how the markets would just gyrate for another 4 months.richard5za wrote: Fri Jul 29, 2022 8:54 am Phong, bear markets that are accompanied by a recession tend to be long drawn out affairs, quite different to non-recessionary bear market corrections.
I don't think that the market will bottom this year; my current view (based upon my own fuzzy maths) is January 2023 at the earliest but more probably mid 2023 for the market bottom
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